Nov. 8 (Bloomberg) -- Canada’s dollar traded below parity
with its U.S. peer for the first time in a week amid concern the
euro region’s sovereign-debt crisis may worsen after leaders
said they will delay the decision to give Greece its next round
of aid.

The Canadian currency, nicknamed the loonie for the image
of the waterfowl on the C$1 coin, fell against the majority of
its 16 most-traded counterparts as a report showed housing
starts were less than forecast in October. Canada’s merchandise
trade deficit unexpectedly narrowed in September as rising oil
prices mitigated a lower export outlook.

“The headline out of Greece about delaying aid was
negative, setting the euro under pressure and the Canadian
dollar is just caught in the crossfire,” David Tulk, chief
macro strategist at Toronto-Dominion Bank’s TD securities unit
in Toronto, said in a phone interview. “For a while people
treated the currency as a risk-on, risk-off currency, and the
trend may be reasserting itself now with people trading
cautiously.”

The Canadian dollar declined 0.4 percent to C$1.0003 per
U.S. dollar at 5 p.m. in Toronto after falling yesterday the
most in three weeks. The loonie last weakened below parity Nov.
1 after Hurricane Sandy closed equity markets earlier that week.
One Canadian dollar buys 99.97 U.S. cents.

The Canadian currency fell below its 200-day moving average
at 99.93 after previously breaching its 50- and 100-day moving
averages, levels seen by some traders as turning points in the
direction of a security’s price. The average, a momentum
indicator, is calculated by adding closing prices for a specific
number of assessment days, then dividing by that number.

Carney’s View

Bank of Canada Governor Mark Carney said he is prepared to
act if his country’s economy is hurt by the failure of U.S.
lawmakers to avoid the fiscal cliff of $600 billion in tax
increases and spending cuts set to be implemented in 2013 unless
Congress acts to lower the budget deficit.

“We will react if necessary,” Carney said in an interview
with CBC television. He said he wouldn’t act “in anticipation”
of an agreement not being reached.

Euro-area finance chiefs won’t make the call to release
31.5 billion euros ($40.1 billion) of aid for Greece that has
been frozen since June when they meet in Brussels on Nov. 12, a
European Union official said today. Ministers await a final
report from the so-called troika that oversees the bailouts on
Greece’s efforts to meet conditions before taking action, the
official said.

Canadian housing starts were 204,107 at a seasonally
adjusted annual pace last month, Ottawa-based Canada Mortgage &
Housing Corp. said on its website today. Economists forecast a
reading of 210,000 according to the median of 21 responses to a
Bloomberg News survey.

‘Deteriorated Sharply’

Canada, which sits on the world’s third-largest pool of oil
reserves, recorded an C$826 million ($829 million) trade deficit
in September, down from a revised C$1.52 billion gap in August,
Statistics Canada said today in Ottawa. Economists surveyed by
Bloomberg had forecast a C$1.5 billion deficit, based on the
median of 21 responses.

“Prices for key Canadian exports have deteriorated sharply
since September, highlighting that the trade deficit is poised
to widen again at the start of the fourth quarter,” David Watt,
chief economist at HSBC Bank Canada in Toronto, wrote in a note
to clients.

The Bank of Canada will remain “very cautious about adding
to upward pressure on the Canadian dollar,” as the deficit
stays elevated, he wrote, adding that the bank will “remain on
the sideline” in 2013.

‘Touch Weaker’

Fewer Americans than forecast filed claims for unemployment
insurance, with applications falling by 8,000 to 355,000 in the
week ended Nov. 3, the Labor Department said today in
Washington. One state said the loss of electricity due to
Hurricane Sandy suppressed filings, while others said workers
who lost their jobs as a result of the weather were starting to
reapply, a Labor Department spokesman said.

“Canadian housing starts were a touch weaker than
expectations and trade was ambiguous in terms of driving the
market,” TD’s Tulk said. “People were likely to look through
the U.S. improvement in jobless claims because of the influence
of Hurricane Sandy. The market most likely looked through the
data with a more neutral interpretation.”

Government bonds rose, pushing the yield on the 10-year
benchmark note down three basis points, or 0.03 percentage
point, to 1.72 percent. It plunged yesterday the most since
Sept. 26 along with U.S. Treasuries. The 2.75 percent bond due
in June 2022 gained 28 cents to C$109.09.

Raised Forecasts

Economists raised their estimates for Canadian 10-year bond
yields for the first time in seven months, even as U.S.
lawmakers are heading for a budget showdown that may derail
global economic growth.

Yields on Canada’s benchmark bond will end the second
quarter of 2013 at 2.05 percent, according to the median
estimate of 20 economists surveyed by Bloomberg News from Nov. 2
to Nov. 7. That’s up from 2.02 percent in last month’s survey.

Canada’s dollar has gained 0.7 percent this year against
nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The greenback has lost 1.6 percent and the yen
and euro are the biggest decliners, losing 5.1 percent and 3.4
percent.